Did you know that 4 in 10 Canadians believe that they would run out of money in less than a month if they lost their primary source of income? That number may sound high, but after the Financial Planning Standards Council conducted an extensive survey, they did in fact find that 40% of Canadians don’t have a substantial emergency fund.
If that weren’t worrisome enough, they also found that 1 in 5 Canadians said their savings would only last them one week. So essentially, 1 in 5 Canadians are living close to a paycheque-to-paycheque lifestyle.
In my mind, this has a lot to do with the lack of financial education and awareness in Canada. So it’s no surprise that FPSC’s survey also found that 2 in 5 Canadians worry about their money once a day if not constantly.
Don’t Be Another Statistic
These are some scary and disheartening statistics I know, and although it does show in black and white how much work still needs to be done as far as financial literacy goes, the silver lining is this is all fixable. It’s why I’m so passionate about blogging about personal finance and sharing inspirational interviews on my podcast — I truly believe that anyone can fix their financial situation if they really want to.
If you’ll notice, the key words here are “really want to.” If you don’t have a good enough reason to do something, you won’t. How many of us have tried to lose weight only to get a gym membership but never use it? How many of us have complained about our jobs but haven’t done anything to find another one or upgrade our skills? Unless we have a strong enough reason to break our current patterns, change is almost impossible.
Go Find Your “Why”
The other night I was talking with my husband and he shared how he hoped to make more money this year compared to last year.
So I asked him a simple question: “Why do you want to make more money?”
This made him think for a bit, and eventually he realized that making more this year, wouldn’t make him happier than last year.
I followed up with another question: “What would you do with all that extra money if you made it?”
He said he didn’t know. He’s already achieved many of his financial goals, such as buying a home, having a large sum of money invested for his retirement, and having the freedom to work for himself at home.
He didn’t know his “why.”
Similarly, I believe this is a big reason why most Canadians don’t save more money like they should. Sure, the risk of being laid off without any money in the bank is a scary one, but I don’t think it’s scary enough for 40% of Canadians to start budgeting and putting away a large chunk of their income into a high-interest savings account.
They need to find their “why.” For me, my “why” for saving, investing and making more money through my side hustles is freedom. I never want money to dictate what I can and can’t do in life. As long as I have plenty of cash in the bank, I know I won’t have to turn down certain opportunities or experiences because I can’t afford it.
Maybe your “why” is getting rid of the stress in your life. Because I’ve got at least 6 months of living expenses saved up and don’t have any debt, I don’t stress about my money. It’s an amazing feeling! If you want to be more relaxed and have a more balanced life, that might be a strong enough reason for you to get to work on fixing your finances.
Make Your “Why” a “How” with a Solid Plan
Once you’ve found your “why,” it’s time to make a plan and put it into action. One way to do this would be to work with a Certified Financial Planner® (CFP) professional to help you create a plan. You can don’t have to go straight to the bank to find one either, you can also check out the FPSC’s FindYourPlanner.ca website.
If you’d rather take your finances into your own hands, here are some steps to get you going:
- Take a look at your credit card statements and bank accounts to see what you’ve been spending your money on for the past 6 months.
- Make a budget that fits your bills and goals. You can get started with my free budget spreadsheet.
- Track your spending to keep yourself in check.
- Continuously educate yourself about personal finance by reading what’s going on in the news, reading personal finance books and blogs and listening to podcasts. There are also some great educational videos Financial Planning for Canadians‘ website!
- Pat yourself on the back because you’re taking a big step into bettering your life big time!
Download my budget spreadsheet
The first step in getting your finances right is starting a budget. I've been using mine for over 6 years, so why don't you give it a try!
This is a sponsored post by FPSC, but all the opinions and thoughts are my own.